In three parts, I explore factors contributing to the behavior of low-income individuals. Specifically, I have identified issues relating to trust, mental accounting and self-affirmation. First, in Studies 1-3, I explore the extent to which concerns of trust drive preferences for financial contracts of low-income individuals versus the wealthy. In a nutshell, I find that when selecting among contracts for buying or selling a good or service, low-income respondents (relative to the more wealthy) appear to weigh the perceived trustworthiness of the contract partner more heavily (as opposed to focusing on the financial terms of the contract). In addition, I explore self-reported rationales for these choices and general notions of trustworthiness among low and high-income groups.
Studies 4-5 show that low-income individuals do not reliably replicate a well-established finding regarding savings preference. Specifically, when considering spending time to travel in order to save a certain amount of money, low-income participants do not consistently show a preference for savings on proportionally larger sums of money (as has been previously demonstrated in this literature). Instead, they seem to focus more on absolute amounts of savings.
In Study 6, I use a self-affirmation intervention on a group of low-income individuals. Self-affirmation theory is based on the general premise that individuals are motivated to protect their perceived sense of self-worth. When used as a behavioral intervention, affirmation has been shown to attenuate or eliminate the effects of a host of psychological phenomena, including those related to stereotype threat. After random assignment to either a self-affirmation or neutral condition, participants' interest in a financial benefits program is measured. Individuals who have been affirmed show a greater likelihood of accepting information about the Earned Income Tax Credit program.
In sum, I argue that there are subtle differences in what features low versus high-income groups focus on. Generalizing from the findings of high-income individuals causes these nuances to be overlooked. From a practical standpoint, a better understanding of the nuanced differences between low and high-income decision makers can facilitate the development of more efficient policies and programs targeted at lower income populations. (author abstract)